The Canadian Real Estate Association reports a national resales drop in June 2017, with a dip of 6.7 per cent in a majority of Canadian cities compared to May. That’s the biggest monthly drop since 2010. It continues a trend that now stretches back to April of this year and sends a clear signal that a cool-down is occurring in the housing market.
However, the drop does not apply to all centres. That includes Ottawa, which saw a surge in resale numbers last month and has enjoyed healthy growth so far this year.
The national drop comes just as the Bank of Canada has instituted an interest rate increase, which could have a further dampening effect on housing markets if it’s followed by more hikes. At the same time, the recent rate hike could temporarily spike sales, spurring those with pre-approved mortgages to buy before their rate expires.
“Canadian economic and job growth have been improving, which is good news for housing demand,” said CREA president Andrew Peck in a statement. “However, it also means that interest rates have begun to rise, which may impact home buyer confidence – particularly in pricier markets like Toronto and Vancouver where recent housing policies had already moved potential buyers to the sidelines.”
The housing policies to which Peck referred, including a provincial 15 per cent tax on foreign buyers, are meant to cool overly hot housing markets.
Toronto leads decline
CREA says the decline in sales numbers was steepest in the Greater Toronto Area, at 15.1 per cent in June. The GTA has been an explosively hot market in the recent past, with double-digit increases in both sales numbers and prices par for the course. CREA also reported sales slippages in the Lower Mainland of British Columbia, Montreal and other centres.
Sales in Toronto plunged over 37 per cent in June compared to the same month in 2016, according to a separate report by the Toronto Real Estate Board.
Meanwhile, CREA says that national home sales in June were down 11.4 per cent compared to the same time last year.
Ottawa fares well as national resales drop in June 2017
Resale activity in Ottawa bucked the national trend last month, with an 8.9-per-cent increase in sales compared to June, 2016, according to the Ottawa Real Estate Board. For the first half of 2017, sales were up 13.5 per cent over the same period in 2016.
“We’re having a stellar year so far in 2017,” said OREB president-elect Ralph Shaw in a statement.
Condominium sales, which had lagged for the past few years because of oversupply, have been particularly robust, increasing more than 26 per cent since the start of 2017.
In a parallel move, new home sales in Ottawa are also booming, according to industry analyst PMA Brethour Realty Group. Sales in June almost doubled over the same month last year – up 90 per cent – and have shot up 23 per cent per cent over May of this year.
Calgary, London and Halifax-Dartmouth were among other Canadian cities where resale home numbers surpassed year-ago levels.
Price trends vary
Nationally, the average price for a resale home sold in June was $504,458, up 0.4 per cent from a year ago, according to CREA. Excluding the Vancouver- and Toronto-area markets, where prices remain well above other cities, the national average price was $394,660.
In Ottawa, a recent Royal LePage House Price Survey shows prices increased 8.2 per cent in the second quarter to $432,864. The average price of a two-storey home jumped 10.4 per cent year over year to $460,277 in the same period.
The new report also says inventory levels across Ottawa have reached three-year lows, down by more than 20 per cent when compared to the same time last year.
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